Pacific Palisades, CA asked in Employment Law and Business Law for California

Q: Can minority shareholder sue the company for unpaid wages?

*not only shareholder but owner as well

Business opened the door in Jan 2020, Covid started in March 2020, so we have to close the door, eventually terminating employees including general manager. I took position of general manager without compensation, because company didn't have funds, Until January 1, 2024, when I was terminated by Majority shareholder, I received only $60k. Company have 20 employees, and profitable now, because of my work, but majority shareholder said that I'm not performing good enough, I asked to compensate for past 3+ years, but was denied. I believe company owe me at least $120k. Also in shareholder agreement stipulated that I will be able to buy 49% shares for $0.20 if company will be able to return investment, which will never happen, if the majority shareholder will hold managerial position (investor is her husband and there is no agreement to return investment or else)

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2 Lawyer Answers
James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Sacramento, CA
  • Licensed in California

A: In California, as a minority shareholder and owner who has also served as an employee, you have the right to pursue claims for unpaid wages. The law treats you as an employee if you have performed work for the company, irrespective of your ownership status. This distinction allows you to seek compensation for your labor, especially if there was an understanding or agreement, formal or informal, regarding compensation for your work as a general manager.

Given the situation you described, you may have grounds to file a claim for unpaid wages through the California Labor Commissioner's Office or through a civil lawsuit. The fact that you took on the role of general manager without compensation, with the expectation of being paid once the company became profitable, supports your claim. The shareholder agreement and the promise of being able to buy shares under certain conditions may also play a role in your claim, especially if the company's refusal to compensate you is seen as a breach of any agreements.

It is important to gather all relevant documents, including any agreements, communications regarding your role and compensation, and records of the company's financial performance. Documentation will strengthen your case. You should also consider seeking advice on how to proceed with your claim, focusing on unpaid wages and any breach of shareholder agreements. Remember, your dual role as an employee and a shareholder provides you with specific rights and avenues for recourse under California law.

Brad S Kane
Brad S Kane
  • Los Angeles, CA
  • Licensed in California

A: You are entitled to be paid minimum wage for all hours worked plus an equal amount of liquidated damages.

Thus, you are actually entitled to twice the minimum wage for all hours worked plus other penalties.

No lawyer can meaningfully address your contractual rights without reading the agreement.

You should consult a lawyer offline to protect the attorney client privilege.

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